tv On the Move Bloomberg December 6, 2013 3:00am-4:01am EST
that is very well priced into the markets. > we'll have to watch out. prime minister of japan has called a summit with china as tensions were rising over the disputed islands. >> they really were. china has a restricted air zone over those islands. this has affected business with the japanese companies within china. abe would like to do something about this. he does not want the dispute to dominate the relationship. the problem for him over the last year is i of that it has dominated the relationship. >> it will have an impact. the world of course wakes up to the death of nelson mandela. >> the world is mourning and as we mourn, we are waiting to hear
news about funeral arrangements. the funeral will be held in about 10 days. there is not only going to be a public memorial but a private memorial. >> of course we'll have complete coverage go and through mr. mandela's legacy throughout the program. manus, we have a lot of data. we have tensions easing a touch. we'll go through what nelson mandela gave to the world. what else are we watching today? >> >> the germans have a healthy look at inflation. next year, germany will grow by 1.7%. we go to the unemployment numbers later today. euro/dollar is declining to 1.4616 despite yesterday's e.c.b. move yesterday or lack of movement yesterday and lack of christmas party for the market
remains high. the drop has stopped for now. let's put it that way. the u.k. had its longest losing streak since april. down over 2.5% this week. the dax is at a three-week low. continuing a little bit lower despite that upgrade to growth. goldman sachs and deutsche deutsche say the overall relax nation austerity. going to see growth around the world double since 2010. that stepping back from austerity will begin to play into the numbers going into 2014. we wait for unemployment report. the median estimate is for 185,000. now where are we in terms of some of the stock news? postnl now,
nestle is selling over a billion ollars worth of stock in givaudan. they are reacting aggressively. postnl down. the opening prices begin to filter in, you get a better complexion of how the market works. b.p. up 3 1/3 of 1%. >> thank you. joining us now for a look at his 2014 outlook for european equity markets is goldman sachs' chief equity strategist, peter oppenheimer. talk to me a little bit about what you're expecting for 2014. 2013, equity markets have had a good rally to say the least. can we build on that? >> i think we can.
rellive to other asset classes as well. there are two wives looking at this. the prospects are still very poor and equities will benefit from what we expect to be a reasonably good pick in global growth. we're expecting pretty decent gains in europe around 15% to 15%. plus -- 12% to 15%, plus dividends. >> how much of equity growth has to do with fundamentals and how much has to do with the stimulus being delayed until april or march next year? >> we are in ra transition especially in europe from a market driven largely by multiple expansions as expectations rise for a recovery and the risk premium comes down, people get a little bit more confident. we think the fundamental growth is going to be key. but that growth is not purely dependent on europe on its own. a lot of companies of course in
europe heavily dependent on the rest of the world. it is a combined effect with an improvement in margins that we think would bring profits up around 14% across europe as a whole. >> we're so hooked on q.e. that people know that it will come to an end at some point, but it is not being priced in at all. >> well, i think that the end of q.e. is being priced in. it is heavily flagged. i don't think it would be a great surprise to anyone that tapering was announced or started. the issue i think that is critical is whether that has a major effect on the start of all monetary policy. when they announce tapering, they will also reduce unemployment threshold in the u.s. they will keep interest rates low for a very long time. we would expect funds rates to emain unchanged in the fed until early 2016.
>> so the day that janet yellen says we're going to start tapering, you're not expecting a big correction? >> the reaction was not good in bond market or equity markets, but to some degree that has embeded the idea that this is it is going to happen at some point as you stay in the not too distant future. we would guess that the response would be a bit more modern at this time. again, the crucial thing is what the start of tapering -- the start of monetary policy overall. we think that, you know, the conditions will remain pretty adom dating. that is the key thing. >> your outlook for 2014, what should by watch ought for in terms over the big dangers that equity markets should be looking out for? >> i guess there are two key risks. one of them is related to the discussion we just had.
plausible that bond yields spike sharply higher as they did in may of this year and given the equity evaluations are higher than they were then, it would leave equity markets vulnerable to a setback if we were to see that kind of thing happening. we estimate in europe that the duration over the equity market is around 20, so each 1% rise in bond yields would be worth a 20% move the the index. that is a key risk. the other one is that profits just don't recover. >> ok. we'll talk more about that after this very short break. thank you. we'll talk about the biggest -- the second biggest risk that we have for 2014. here is a look at what else is coming up on "on the move." u.s. job gains are set for the best year since 2005. what to expected from today's report. can brazil bring its a game? we look at preparations in the
all the data from the u.s. this week has set expectations for a strong number. our markets editor manus cranny joins us with the latest. what exactly can we expect from the jobs report? >> in term turnovers actual number, the median number is 185. the numbers are pricing in perhaps a stronger number. the services number didn't quite live up to the estimate. put that together with the private indicator we had from a.d.p. and the consensus is you can be looking at around 200,000. it is about the velocity and momentum within job growth and whether those jobs that are being created actually translate into spending power. and to that end, this year is going to be the best year since 2005 and you're lookingan at an unemployment rate down around 5%. it will be the correlation between tapering and the guidance in terms of the unemployment rate that really begins to count.
>> so manus, what are markets exactly pricing in? >> have a look at the 10-year government bond yield. this is important in term turnovers morning market overall in the u.s. as well. this 3%, we're encroaching on the 3% level. you the highest level in bond yields for three months. the question is this. we're probably one good payroll number away from a complete unwinding of the bond markets. as you and peter have been discussing, 1 percentage move higher in bond yields represent a 20% drop in equity markets. get ready for more volatility. the volatility in the bond markets is set to retrace higher, francine. dollar is lower. stocks, you're seeing a little preparedness for the end of the
year and indeed the potential for the door being open. that is highly unlikely. >> manus, thank you. manus cranny there. for more on the u.s., peter oppenheimer is still with us. thank you so much for sticking around. we were talking about the risks you are seeing for 2014. you mentioned too, one was the fact that with this tapering we could see moves in fed funds. the other one was that profits may not follow fundamentals. fundamentals are not there to -- for profits. is that worldwide or the u.s.? >> generally worldwide. there is a big expansion of evaluations over the past year. we believe that we're now moving into a phase where really you're likely to see valuations remain more stable and the markets driven by profitability. the u.s. is more vulnerable.
profit is already at a record high. so are margins. so are sales. we they we're not likely to see much margin exfrangs here. so the driver to earnings has to be top line in growth. we're looking at 8% growth next year for the s&p. that is below the profit growth we would have been expecting in europe, asia and japan. >> what is your best plan for 2014? equities or still kind of a range of equities in the world? >> i think first and foremost, our view, which has been in place for -- two years is to be positive on equities versus government bonds. that is number one. within equity markets, our preference really is for a combination of nonu.s. equity markets. the best return forecast we have are in japan and europe over the course of the next 12 months. not because they necessarily
have better economic outlooks but because you a recovery in profits from a lower level. more leverage. top line growth. you get a little bit stronger profit growth to drive the markets higher. >> there was a lot of concern surrounding japan a couple of months ago, the financial experiment. we're starting of course to see a lot of freedom on yen. does that make you comfortable that this will work what they are trying to do? >> i think that our expectation is that it will work in the sense that we'll get stronger growth next year. the benefit of reform, supply side changes and -- will have a positive impact on profits. we have already seen a very strong rise in profit growth this year. we're expecting again, a strong rise in profitability over the course of next year. from current valuations, that justifies a decent year in returns.
>> this afternoon, fifa will draw 20 teams that qualify for world cup in brazil. while the teams and fans wait to see which nation also face off, brazil, the host warms up for next summer's event. our jonathan ferro, a big football fan is all over the story. >> today is the day we find out who is playing who and crucially where they will be playing those games. today they will go on the internet tonight, book their flights and hotels and hopefully secure some of those tickets. this is big business. 00,000 visitors expected to go into brazil for the world cup. >> jon, the draw comes at a time when most people are wondering when the stadiums will be a lot safer and when they will be finished. >> it is, francine. certainly. this is meant to be the time
that brazil came on the the international stage, showed off their infrastructure, shiny, brand new, upgraded stadiums. meant to be finished at the end of this month. big problem. many won't be. delivering the weakest growth. you have a rising middle class asking for more from their government. there were protests. a lot of people in that country wondering who why their country is spending just over $3 billion on stadiums when people need a lot more help. if you wonder if that is lot of money, it is. it is almost three times as much as south africa spent on their world cup. people are asking when are those stalms going to be finished. >> it puts the spotlight on an emerging economy.
i guess investors such a yourself, i know you cover emerging markets. what is your take on brazil overall or emerging markets? >> i think emerging markets in general are facing some head winds. really a reverse oovel what we have seen in the last many years or diamondback aid or so. in particular, the previous decade we were seeing falling global interest rates. we have a theme in commodity prices which which is in some way reversing over the medium term. thirdly, you had a significant boost to many emerging economists as a result of the labor markets which is becoming less parent as we move forward. when you add to the fact that some emerging markets have also built up external -- making their currencies vulnerable and leaving them also vulnerable to inflation and pressures and
rising rates. the cocktail i think results in more concerns about merging economies and their markets relative to what we're seeing in the developed economies where a more sustained economic recovery and profit recovery, i think, is coming flument >> peter thank you so much for that for now. peter oppenheimer of goldman sachs. he stays with us. his final thoughts on the sectors are coming up next.
>> in a strange way quite happy. i mean, he led an extraordinary life. he really wasn't alive to the world over the last two years. and you know, he really just didn't know what was going on. so i think it was merciful that he has finally died and he has just left the most incredible legacy. i don't think there is in the last century that has meant more to the world than nelson mandela. >> welcome back to "on the move." that was sir richard branson speaking to bloomberg tv about the death of nelson mandela and his legacy. here are some companies on the move.
the cut comes after a record first half loss yesterday. with the downgrade, they lose the status of two global airlines. the news comes as chinese consumers return to japanese brands. and ford c.e.o. alan mulally will stay through 2014 according o a bort director. mulally is considered one of the leading candidates to take the top job at microsoft when steve ballmer steps down. back with peter oppenheimer. peter, thank you very much for staying around. we talked about your global view and view for 2014. talk to me a little bit about the industry groups you want to be particularly aggressive in 2014.
>> i think if we concentrate on europe, first of all, generally speaking werks prefer cyclically exposed sectors. we think they will benefit from a recovery in growth over the next year. we like to get into a sector where we see decent growth. it has generally been undervalued through the crisis. there are some exceptions, though. we remain cautious. very often, they are the same sectors. companies that have been big beneficiaries of a booming commodity investment and infrastructure investment over the last few years. this is why we have been underweight machinery, basic resources, oil, downgraded in industrial good and services as well. >> you're upgrading banks. you have liked certain banks. now you take the view that they
will grow as growth is more sustainable. >> yes erks that's right. we have been more positive on an insurance sector for most of this year. it was a relatively less risky way of benefiting from spreads with less regulatory overhang. we think it is easing and there will be more clarity as we move into next year with potential european bank supervision. the capital position is much improved. >> we talked so much about tech. that is all we have talked about in the last six months. is 2014 going to be another tech year? >> yes, with we like tech globally. we do expect to pick up an investment spending over the course of the next year. many places will benefit, a lot of technology companies because a lot of the investment is going
into increased efficiencies rather than the capital deepening or machine machinery or equipment. >> peter, thank you so much for being with us for the first half of the program. peter oppenheimer. coming up on the program, we take a look at the life and legacy of nelson mandela. as we head to break, several elebrities have been speaking. bono said --
>> welcome back to move. i'm francine lacqua at bloomberg's european headquarters here in london. wiver 30 minutes into the -- we're 30 minutes into the trading day. let's see how things are shaping up. stocks for the moment pretty much at advancing. you can see the character -- the cac the dax and the ftse up.
euro/dollar will be driven by the sentiment from the u.s. jobs data. you can see dollar/yen 102.19. chief abe is calling for a summit with the chinese president. he wants to discuss tensions over an air defense zone in the east china sea. japan has its own zones to protect its claim to strategicically important islands. the port of hamburg has listen closed as german and danish residents cope with a strong north sea storm. london also closed the gates it is a storm passed through the british islands. 100,000 are without power. well wishers are mourning the death of nelson mandela.
he died yesterday at 95. david cameron spoke about the freedom fighter late last night. >> one of the brightest lights in our world has gone out. nelson mandela was not just a hero of our time, but a hero of all time. >> well, nelson mandela served for five years as south africa's first black president after his african national congress party helped end apartheid in 1994. here is a look at his legacy. >> a free man taking his first steps into a new south africa. >> from prisoner to president. nelson mandela's 1990 release from jail signaled the end of apartheid. he would go on to become the country's first truly democratically elected leader. >> i nelson mandela do hereby
swear to be faithful to the republic of south africa. >> born to a local chief, mandela was one of 13 children and the first member of his family to atend school. apartheid that made colored south africans second class citizens. as white south africa became more aggressive, so did he. as the head of the armed wing to have african national congress, the a.m.c., he led violent, sabotage attacks and was arrested and tried in 1962. he would spend 27 years in jail, but he was never forgotten. 4 eventually international and internal pressure led president declercq to announce apartheid
would be dismantled and mandela would walk free. but he reached out to his former oppressors and tried to heal a divided nation. in 1993, he and declercq shared the nobel peace prize. > fellow south africans. we appreciate the con contribution they have made to the development of this country. >> in 1994, he voted for the first time with millions of his fellow black south africans. he became a statesman, an international icon. for south africa, he was a symbol of the country it wanted to be, despite struggles with poverty, racism and aids. free of any hatred, free of bitterness. free of any idea of --
>> many will remember this. mandela celebrating south africa's place on the world stage as it hosted the 2010 soccer world cup. >> he is a great man. africa loves him. >> a simple tribute from a child sums up his place in south africa's hearts. it reads thank you for our dignity. >> for a closer look at nelson mandela. this is someone that you have covered many times, that you have also met. what will he be remember as as a person? >> it is such a difficult thing. as president obama referred to a man rarely seen. a man that was not only humble but very powerful. someone we probably won't ever see again in our lifetime. he was such a rare character. he came from the royal family. he had the presence of royalty
yet he was so humble. it is something that people always talk about. they had ability to disarm his enemiesly kindness and eventually his enemies would want to be his friend and would fall in love with him. that is some of the rhetoric we know as south africans. he is known as the father of the nation. the person that came to symbolize someone who could take a difficult dispute and resolve nefment will south africa change after his death? >> this has been debated for quite sometime. a lot of people were in denial. he was 95 years old and sick for a very long time. it was something that was in the back of our minds. he seemed invincible. he fought until the very end. whether south africa is going to change, i think it is going to give a lot of people hope and look back at the very rhetoric and the philosophy of nelson mandela that he imparted in 1994
and are gave to the country and i think a lot of people are going to revisit that and look at the tensions. there are tensions now. there is inequality. >> do you think he will basically reunite they will? we don't have the details yet of the funeral, that the country will come together even more. >> they really have come together. just looking at some of the visuals outside his house. you will see people from all walks of life. the whole night i didn't sleep. i was watching and seeing what was going on in south africa. people coming together. laughing together. crying together. s.membering the tough time nelson mandela has always been able to bring the country together. he did it in 1995 with the rugby world cup. that madiba magic. >> can you remember, was there a
specific moment where the world really saw what he was like? >> there are so many anecdotes used. one of the stories is when he was president and being escorted to an event, obviously security and he saw a woman that had broken down. he tried to ask his entourage to stop and they refused. he said well, i'm the president. you stop and they did. he caubd out with his umbrella a dark suit in the rain and offered to help this woman. there are so many stories of this kind. then again, they also remember him for his decision making. the commission that was put together so people could be open about all the atrocities they committed and not be put into jail for it. his impact is far and wide. it is difficult to put into words. >> it is difficult. at the same time you see all of
>> i'm francine lacqua in london. this is "on the move" on bloomberg television and streaming live on bloomberg live, your tablet, phone and any windows phone as well. companies on the move. deutsche bank is cutting about 200 commodity jobs. reducing to the lowest since 2009. the cuts come from ything from nergy to metals. potify plans to offer a free supported mobile music device. the service is said to let the company attract more users who
could be converted into paying subscribers. now "the pulse" is coming up in about 15 minutes from now. i'm joined by my co-anchor, guy johnson. we have a very packed and diverse show. we have some great interviews. >> the shoes in dominated by the death of nelson mandela. we will of course be covering that and south africa moving forward from here. we'll be talking to goldman sachs' head of south africa. he will be joining us from johannesburg. we'll get his taken to news we had sadly overnight. we'll be talking to the irish finance minister, michael noonan. what is the future of ireland once it moves from that
protective shield? what kind of story is it going to be? what happens to the banks? what kind of protection is there for this country if it needs further assistance down the road? michael noonan will be joining us in the 10:00 hour. we have some big announcements coming through from tech city today. we will get analysis on what we are going to learn today. it is going to be an interesting announcement with some very high profile faces at this event. plus we have the c.e.o. of legal in general. that is coming up on the first hour of "the pulse." diverse, fascinating. it is going to be a busy two hours. >> yeah, it certainly is, guy. i'm looking forward to it. "the pulse" in about 12 minutes from now world leaders are mourning the death of nelson mandela today. the former south african president died yesterday at the age of 95. joining me now on the phone is
the former ambassador. great to have you on the program. it is a very sad day. how will you remember nelson mandela? >> first of all, thank you for having me. it is a very sad moment for all of us. nelson mandela was a father to all of us. during the struggle and even after. when we got our independence because he was our first president, he became our first president. he has always been the father, ready to listen to advice.
disputes could be resolved. >> what is the new south africa going to be like after his death? >> can you repeat that question, please? >> he is the person that was resolving issues that were very difficult. that nobody ever thought they could be resolved. will south africa keep that legacy? , we l, we south africans fought to be where we are today and i think we shall continue keeping to those values. >> all right. sandy, thank you so much. it is a very difficult day for everyone. we're going to leave it there. we'll hopefully come back to thandi, the ambassador to mozambique.
all the world leaders have been paying tribute to the great man that was nelson mandela over the last couple of hours. ryan chilcote has more on this story. what is it? >> this is a real surprise. this is russia's first, let me show you there. their first smart phone. it is kind of exciting to be covering the tech space because you get all of this innovation. it is on the surface, it looks like it is just your regular l.c.d. screen with -- driven by android. watch this. you can basically scroll through it and choose an app that you want. there we go. sorry. there you have it. i've decided that i'm going to read through the looking glass. i can pull it up there. but you know, i know you and i were always on a scavenger hunt for outlets and power. these screens can soak up the
power. here is the thing. you click the flip button and then it goes on to the other screen which is just like your kindle. the first screen shuts off and that the company says gives you 60 hours of battery power. you can use it for books but also for social media stream, your calendar. it will auto update. >> i need the font bigger, ryan. >> here you go. there you have it. >> it is like a double screen. >> it is a double screen. it is the world's first phone with two screens that talk to one another. they interact. you can send what you have chosen on a if android screen and then you can go back. some people think it is a gimmick. it is innovation. it went on sale this week in europe. it is going to come to the u.k. early next year. 500 euros right now. kind of a nice little surprise.
as a business model, you know, i guess only time will tell if it is going to be successful. it definitely pushes the envelope in terms of what smart done. have traditionally >> i think you and i have had fights over charging before. >> many times. i know russia wants to be a tech hub. we have tech city here in the u.k. how are they faring? >> the interesting thing about this is this c.e.o. was on earlier. he said this is a multinational effort. we just happen to be -- i han to be russian. a lot of -- happen to be russian. a lot of tech companies look at that. it is happening in yussia and the u.k. tech city. they are having their third anniversary. the former head of facebook in europe is now running tech city. looking at what the u.k. has done over the last three years. some people say the company has
gone light years in terms of the government getting behind tech. they have doubled what they had a couple of years ago. 1/3 of the new jobs in london are not in the city, they are actually in the tech sector. a little bit of hype there. the government is launching the econd leg of its initiative. yeah, you know, it is going to be a theme throughout the rest of the morning and a big theme in the u.k.. >> it is a pretty cool device. thank you. >> i'll keep it. >> can you called someone with it to see if it works? stay on the phone for 60 hours. >> and read a book at the same time. i'll give you a call later. >> stay with "on the move." just before we go, i want to update you with european stocks. the big news, the nonfarm payroll. european stocks are rising. we'll get back to it in a couple
>> we've lost one of the most influential, courageous and profoundly good human beings that any of us will share time with on this earth. he no longer belongs to us. he belongs to the ages. >> one of the brightest lights of our world has gone out. nelson mandela was not just a hero of our time, but a hero of all time.
>> nelson mandela was a triumph for justice and human inspiration. many around the world were greatly influenced by his selfless struggle for human dignity, equality and freedom. >> in a strange way, quite happy. he led an extraordinary life and he really wasn't alive to the world over the last two years, you know, he really didn't know what was going on. so i think it was merciful that he has finally died and he has just left the most incredible legacy. i don't think there is anybody in the last century that, that has meant more to the world than nelson mandela. >> world leaders are reacting to the passing of nelson mandela. we're joined by our markets editor, jon ferro. we'll be going through the
legacy that he left behind. a mooverpb peace and great wisdom -- man of peace and great wisdom and has left an economic leg spifment >> he was able to turn the country around from below 1% growth before he became president to north of 3% growth during his time as the president of the country. we focus on the social impact he had. he increased grants in south africa and ensured that pregnant women and children had free healthcare. these are some of the things still reverberating in south africa today. >> we'll have much more on the passing of nelson mandela in the next two hours. we have data, crucial data, u.s. jobs in the u.s. and it will give us the timing on when the fed will start tapering. >> it is the open ended debate. peter oppenheimer of goldman sachs said look, it is not going to be a shock whenever taper
comes. >> you never underestimate the markets. he said a 1% rise in yields is approximately 20% lower in equities. what you is probably a little bit of a dip in the data. estimate, 186. markets pricing in good data above 200. >> the data that is coming in later this afternoon. we had the japanese prime minister calling for a china summit. >> it has been playing out over the last 12 months. escalating over the last 12 months as well. over the islands in southeast asia. china put up a no flight zone. there was a fear this could go down a military route. there was the rise of anti-japanese sentiment in china. no good for japanese companies looking to penetrate that economy. good news for all of us. this is going down a diplomatic
>> our beloved nelson mandela, president of our democratic nation has departed. >> farewell. apartheido overcame reaches the end of the journey that took them from prisoner to president. >> it is jobs day. a role data could leave the u.s. track for the best year of job growth since 2005. >> japan's prime minister calls for a summit with china to ease tensions over the islands.